pick up led light bulbs. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ julia: live from bloomberg world headquarters in new york, i'm julia chatterley. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. equity is little changed in the dollar adds to its losses. joe: the question is, "what'd you miss?" borish, we have peter the quite group chief strategist -- the quad group chief strategist joining us. murkowskiator lisa has agreed to kill the obamacare individual mandate. what does that do enough to pass the measure? issue guaranteed yes vote? and retailers pull out all the stops in an effort to survive. friday will be a make or break day for struggling brick and mortar chains. we have breaking news. broadcom is said to be considering a higher bid for qualcomm, according to reuters. this is just days after qualcomm rival broadcom's takeover bid. make thee deal could world's largest chipmaker. the original bid was valued at $105 billion. we have been talking this week about whether qualcomm investors would accept something around $70, perhaps pushing the $80 share price. qualcomm'sroubles .facing right now any further headlines on that, we will flush them out and bring them to you. scarlet: qualcomm shares are getting a bit of a pop, currently up by about 1.6%. trading at $67.70. "what'd you miss?" a quite trading day ahead of the pasting, but in years, the markets have hit new highs on a regular basis. here to break things down is peter borish, chief strategist for the quad group. peter: a year is a very long time. if we just looked back at this year, if we thought the equity markets would be doing as much as it has done, with little volatility. the big thing for next year is unlikely, more the same. it is likely to be slightly different. there are a whole host of reasons. scarlet: such as? peter: we don't see the underlying aggregate demand continuing to increase. we are seeing this in the yield curve. and i really enjoy the fact that when everybody doesn't like the story, they go, they yield curve is getting flatter, is the flattest it has been in a decade . it can't be the bond market telling us there is a some problems, it has to be some technical things to do with the fact that people have to buy short-term. there is always a great excuse to want to be optimistic. as we have to step back, analysts and traders, and listen to the message of the market. it doesn't mean, and i say this every time, there are no .echnical indications yet when a market is making new highs every day, the trend is your friend. but you always have to be mindful of potential inflection points. joe: to be fair to people who curve, in thethe late 90's it was a significantly flatter curve than what we have today. it got to four basis points, and and in the next year and a half were some of the most incredible years for risk assets that we have ever seen. if there is something out there that is giving the bond market cause for alarm, or if there is some signal, what would it be? ther: let's go back to 1998-99 year, and say, let's go back and dismiss it. you go and say, yes, we are going to be so smart we will miss the whole 2000-2003 issue. i think the majority of your guests here will talk about, hey, let's hold for longer-term, a five-year or 10 year time horizon. its not really good time to be buying for a 10 year time , because mainly it runs into 2008. ago, the fedars started hiking, the 10 year was up to 20. your we are, three years later, the 10 years at 230 and they have continued tight. there is a new chairperson coming in. we look historically, generally, when a new chairperson comes in the risks some big pickup in volatility. one can go back to the replacement of miller, greenspan replacing volcker, and bernardi replacing greenspan. thelet: what might be trigger for the trigger for that volatility when jay powell is confirmed and takes the reins at the fed. what could he say that would trigger that shift? have: the trigger is you taken this smaller, tightening course at the same time were government fiscal policy is actually being contractionary. we have a government that needs to be funded by christmas, that we haven't even discussed yet. looks at this tax policy, which looks like an entire mishmash that is being run through. i'm not so sure it is going to happen. and so, there is a lot of uncertainty there. so you're tightening, we don't know per se, if you look at , the leveraged loans are historical high, if you look at the debt to gdp, so maybe doesn't take that big of a marginal move to cause a significant increase in risk read that is the whole thing with a risk management. our job is to try to be a little bit in front of it. it doesn't do you any good to say, after the fact, o, it was obvious. go to the asset classes, then. this could be a potential flashpoint the fact that spreads got too tight. you mentioned leveraged loans. where are the flashpoints? peter: i get people to look at the commodity indices and you want to talk about john deere and caterpillar in these other companies and you look at commodity prices, they have been stressed. how are those companies going to continue to expand? so that is another potential spread of leverage. you also look at china, its industrial commodities, iron or. remember, prices are made at the margin. so for this to continue we have to figure out where is the marginal demand coming from? the 3% growth that we have had is not that abnormal. abnormal. there was a quarters of 3% growth under the obama administration -- eight quarters of 3% growth under the obama administration. and i get that 3.1% sounds better than three. you have to look at the numbers as objectively as possible. borish iseter sticking with us. still sticking with its timetable for rate hikes next year. we'll talk about that. this is bloomberg. ♪ ♪ julia: "what'd you miss?" showal reserve minutes members are concerned about inflation. here to talk about it is peter strategist of the quad group. inflationsts think could remain lower for longer than they initially believed. what is it about inflation that andan't get to 2%, reflation seems to be in the backdrop. have: that's one thing we been on target on, inflation expectations. and it has no connection whatsoever to the equity market. one has to be mindful of that divorce. but i love the language. it can stay longer than expected. they had that line in their in what, 2009? and the same people that had been complaining about it and saying we are going to have more inflation, have been saying the same thing. what worries me now is that now they are in a position of policy, so the potential for a policy era with this change of leadership becomes much larger, in our opinion. what are the underlying factors? aggregate demand. rapid technology change. and one has to realize the technology works to the benefit you getsides, supply more, more efficiently but you use it more efficiently. that puts a lot of downward pressure on prices, which is why you are seeing the m&a activity, the broadcom-qualcomm, the whole motion. moreed to drive efficiencies. we have to reduce redundancies, particularly on the overhead side because aggregate demand isn't increasing and prices are rising fast enough to make up for it. joe: when you hear central bankers talk about an inflation mystery, is that this service? is there sort of an answer and it has to do with technology and structural change in this incessant need to always call it a mystery, sort of missing a huge thing? : listen, that's my opinion. i'm not a central banker. the otherve all of assorted pressures associated with being a central banker. but its a mystery if you are saying, hey, we have been incredibly eased, we've had very, very low interest rates, and varied terminology for an an extended. period of time, which is supposed to reduce inflation, but it isn't. east, thee middle equity markets there. there are potshots all around the world, but they are all inflationary. joe: maybe the mysteries that no one is changed their model despite countervailing data. julia: we have to make a decision at some point about whether the game is completely changed. we talk about it in many ways about the stimulus that has been added. peter: that's what worries me. stimulus at the equity markets saw high. we haven't seen any inflation. if there is some turnaround, whether it is voluntary, uncertainty, the government shuts down, fiscal policy is than we think, those are where all the risks are relative to inflationary expectations. they are lower because we have gone this will stretch of we haven't been able to do it. if some he doesn't something and tries and tries and tries and tries, and can succeed, i'm probably not going to give them more money. to get back what you were saying about these first and second order impact as the result of technology on prices, on wages, whatever it is, because you actually have that accelerating down with pressure. but we are not encapsulating right now, we are not making adjustments for intensive supply and demand. argues for a continuation of stimulus, based on what we are seeing come through in the numbers. what does it make you think when you see janet allen saying, i can explain the past three years of inflation, but i can't explain to 17. its a mystery. and we start to see concerns in the day-to-day. you had inflation expectations dipping as well, and now the market is pricing one and a half, and a hike next year. peter: chairperson yellen, which he leaves and writes her book, she will explain the mystery of 2017. best at that. after something happens, explaining why happens. julia: hindsight is perfect. looking-forward question. but seriously, to me, one of the issues of the whole tax code and wages and inflation is, if you want to use more of something, i , if you want to use more something, you need to make a cheaper than something else. if you want more labor you need to make a cheaper, relative to capital. every single one of these policies are making capital cheaper, relative to labor, so it continues the substitution of capital and robots, to labor. scarlet: well said. peter borish is sticking with us and will get your take on game comments on a competitive tax system. from new york, this is bloomberg. ♪ ♪ julia: "what'd you miss?" jamie dimon, ceo in chairman of chase, as comments on the nation's tax code. at a luncheon in chicago today he talked about the need for more competitive tax structure. >> i think we should get rid of carried interest. i think we should get rid of deferrals for hedge funds. i think we should get rid of state and local tax reductions. if you want to raise my rate, so be it. but whatever you do, do not have an uncompetitive tax system in a competitive world. that is a huge error. julia: here now with peter borish, chief strategist of quad group. thoughts? peter: is this the same jamie dimon that was kin concerned about stimulus spending under barack obama. just putting 100% marginal tax rate on anybody the makes money than i do. joe: so when jamie dimon says the only thing we need to make sure we do is focus on reducing the corporate tax rate, you suspect that there is something other? as chairperson of a large u.s. bank, the largest u.s. ofk, yes, it is just so out line. by the way, there is no guarantee on how that flows through and what it does. and then let's go through, in terms of the whole labor issue and where do wages go? the marginal spending for tax cuts for the wealthy, they don't spend it. what do they spend it on? if you had higher marginal tax rates on the wealthy, maybe the da vinci would not have gone for 450 million dollars. maybe it would have got performed million dollars. if you put that into the larger n as a whole, with lower income workers, they would spend 100% that. i don't get weather is this dynamic spending and multiplier effects for the higher end. if you increase the minimum wage on the lower end, for some reason that is all static and only going to reduce hiring because you have raised the price of something. i have to scratch my head on some of this fiscal, monetary-policy logic. is a get stimulate growth, this policy? peter: no. that's the one word answer. you arelihood is, putting in more resources and it will this up a growth and have a large unintended consequence. go, you haveou talked about in the past, when we have talked to you throughout this remarkable bull market, you have seemed concerned but you have to go with the trend. you can't fight it and try to be a genius and a hero and time it. so what do you do? you have expressed various concerns on the fiscal side, inflation, fears of a policy mistake, but the trend is up, obviously. so what do you do now? peter: we always say fundamentals and technicals can divorce themselves for a while, but at inflection points, you need the intersection of the fundamentals in the technicals. the fundamentals may be deteriorating. the technicals have not yet deteriorated but there are warning signs. we are going to keep an eye on that. the russell made new eyes. the dow made new highs. the utilities made new highs. he s&p, etc. this is at the game of trying to be smarter, its a game of trying to make money. that's where we are. we are trying to make money. i'm the dumbest guy in the room and i'm just waiting for some technical indication until there is a chance to take some equity out of the equity markets. julia: how do you avoid losing money? can't avoid losing money. this is a game of probabilities and uncertainty. you take shots every now and then. you avoid bad streets by being disciplined and having good risk management but you are always going to go through a bad stretch. scarlet: or you stick with passive investing and go with index funds because then you are -- peter: passive investing is great. look-backbest scenario. at the beginning of a bull market, ever want to be a traitor. at the end of a bull market, everybody wants to be an investor. its not the time to sell because there are not technical indications to do it. peter borish, chief strategist for quad group, thanks for joining us. happy thanksgiving. julie hyman is here. there is no tractor deflation necessarily, even as you see at price deflation. its an interesting phenomenon when you look at john deere. the company came out with its first increase in sales in four years. and take a look at the bloomberg. this chart is amazing. it is john deere shares. there it is. the john your shares are in white and the bloomberg agriculture solve index of our bloomberg commodities indexes in yellow. nou can see the stagnation i a prices. even if the farms don't have a lot of expendable income, there stuff gets worn out. a lot of this is coming from corporate customers. bloomberg intelligence says the vast majority of customers are --porate so what you are not so you are not seeing the same kind of squeeze it you would see at a small, family farm. scarlet: and a lot of this is coming from overseas, not necessarily u.s. farms. the country gets 60% of its sales from the u.s. and canada. some of it has to do with inventories, as inventories are worked down. there is another chart of the bloomberg that shows that overall, in the u.s., farm inventories going down as sales are rebounding. if there is a three-year replacement cycle and we are at the beginning of this replacement cycle, then the thinking is it could last a little while. the company gets about 20% of its sales from construction and that area is also growing. thatand interesting investors have no nafta concerns. something to watch there, perhaps. scarlet: julie hyman, thank you. the market close is next,. indexes. look at the ♪ julia: "what'd you miss?" nasdaq slightly higher, extending a record high. i'm julia chesley. scarlet: on scarlet fu. joe: i'm joe rosenthal. we want to look at closing bell coverage every weekday from 4:00 to 5:00 p.m. eastern. scarlet: you started with our market minutes. a mixed day for u.s. stocks. we saw modest declines for the dow and s&p. and the nasdaq inching higher by 1/10 of 1%. really little change. this is after the latest minutes from the fed meeting keeping things persistently low even as they stick with their forecast for interest rate increases for next year. joe: s&p below 2600. disaster. julia: disaster. joe will not have thanksgiving. scarlet: he is in new york so i do not know if he will do deep-fried. in the meantime, let's start you off with more m&a headlines. we have qualcomm in the news once again. reuters reporting that qualcomm is considering raising its bid by offering more of its stock. broadcom has not decided on the level of any new offer and the timing is still uncertain so we continue to monitor this story. trading at a record high, deere reporting its first increase in annual sales in four years. ere iss a sign that de climbing out of the downturn after languishing commodity prices. hewlett-packard enterprise, this is a story we talked about yesterday. 7% because megn whitman is stepping down as ceo. she is retiring. antonio neri, who is an engineer, so hpe will be run by an engineer for the first time in two decades. salesforce cutting its reading from neutral to buy. catalyst for further appreciation in that stock. you can see the red banner. nasdaq at a record high with marginal gain. joe: there is something to cheer today. let's take a look at the government bond market. rates are substantially lower across the board. of wisely got the fed minutes in the afternoon -- of course,, we got the fed minutes in the afternoon. a bit dovish perhaps due to people it's pressing concerns about the lack of inflation that we talk about all the time. to 10 year yield down 2.32. julia: u.s. dollar declining to its lowest in a month, slumping for a second day. music trading -- muted trading. janet yellen commenting that is a hint of expectation that future price increases. one year and five-year inflation expectation dictate something to keep an eye on with these. we saw a broader dollar weakness versus some of the cross currency terminal. choppy trading for sterling today. hire.10 philip hammond's budget statement slashing the forecast. a bit of a reality check coming from the government. that is feeding into what we are seeing in currency lands. dollar cad lower. oil lower. the round of negotiations come with news of hints of progress even as the big players were not there. this is an interesting chart. a relatively decent day versus the dollar weakness we saw today. we have all sorts of noise coming from africa in general, but this is south africa here. we have a run-up to the ruling of the african national congress's leadership election in december. will need for president jacob zuma? -- what would it mean for president jacob zuma? who knows? going from the best performer this year to the worst. all over the place here. what we are looking at is what perceptions we are seeing from currency traders. implied volatility to its highest in two years today. fortrade has been hedging big moves in either direction as we go to the leadership election. that is the white line here. the blue line is the one month risk reversal. this is the premium of options to sell the rand versus those who want to buy it. taking some bearish bets off the table and. . put those things together, and you see general confusion. scarlet: no matter what happens with jacob zuma, they will be movement. julia: yes. opposite directions. taking some chips off the table. joe: finally on commodities, julia already mentioned it, but look at crude. west texas intermediate up another 2% over $58 a barrel. gold futures ticking higher. iron ore over 3%. there is a story about the industrial commodities. well.ther ones are doing i just picked iron ore today because it had a nice move. today it is iron ore up 3%. those are today's market minutes. scarlet: "what'd you miss?" stocks bouncing around on this day before thanksgiving. the lead blogger for bloomberg is with us. mike, stocks are bouncing around, but on the whole, they have moved up this week. the theme of the past you because when the flattening yield curve. no matter the fact that the yield curve may be signaling something uneasy. >> it is funny. for so long, the conventional watch out ahat flattening yield curve is a sign of danger ahead. what i have read is the\to that -- the blacklash to that. it is the inverted curve to worry about and even then, a year. the contrarian take is always the conventional was the now. joe: i wa-- wisdom now. joe: i was just about to say that. we are getting the contrary and take to the contrary intake. i feel like we are. mike: he gives you the contrary intakian take. 12% annual gains on average. theone thing i would say is rate at which the curve has flattened has been astounding. 25 basis points in less than a month on the 2-10 curve. we are still at a 50 basis point yield curve. if we just lost five in a month, that is two months away from being an inverted yield curve so it compresses this whole scenario. if i have to give the contrary ian, the rate at which we are pressing -- joe: we will have the next backlash. mike: exactly. julia: he basically argues and it is far more sophisticated than i will talk about now -- mike: that is his specialty. [laughter] julia: but he basically says if you look at the post crisis period, the long end of the curve has been higher than short rates would imply. they should be. mike: right. julia: because have been too curves- the have been too steep. mike: interesting to think they have been too steep, but it all goes to show it is a very tough time. after all the central bank actions we have seen, it is hard to pick up the traditional signals from any of this. one of the things i put on the blog today is how the six-year u.s. treasury tea bill rate matches the spanish rate. scarlet: this is "what'd you miss?" after all. mike: is this anything more than trivia? i don't know, but it is fascinating that you are getting compensated for six months duration the same as you are for the 10 year spanish risk. scarlet: remarkable. joe: one of my favorite charts this week, these stocks, the semi conductor index. now finally eclipsed the .com era highs. if you bought at the peak in the early 2000, you would be in the money now. that is the lesson here. you can buy anywhere and eventually it will work out. steel.: and a stomach of refused to sell. mike: it is a fascinating story, the semiconductor stock. this index is up almost 50%. some of these stocks have more than doubled. traditionally, you always thought of semiconductors as this boom and bust cycle. very reliant on the next windows upgrade or the seven lurches in technology upgrades to smartphones. now i wonder if that paradigm is just out the window. i mean, there is demand coming from everywhere. joe: and of like the whole economy less of a widget economy and more of a structural train were everything in our lives will have chips on it. mike: exactly. that is what it feels like. say that out loud to my probably jinxing it. [laughter] scarlet: just to go to that point, looking at the best performers of the s&p 500 this year, chipmakers among the top 4 best performers. mike: applied materials. scarlet: yes. applied materials, which is a chip equipment supplier. mike: many bitcoin components. just great. julia: brilliant. great to get your insights. thank you for your charts. still ahead, we are live in washington to find out why the odds are improving for the senate tax bill. from new york, this is bloomberg. ♪ >> let's get to first word news this afternoon. texas talisman joe barton apologized today after a text and photo surfaced on the internet. he released a statement that saying oil separated from his second wife, he engaged in consensual sexual relationships with other mature adult women that are now over. a spokesman for the republican said he had no plans to resign. roy moore's campaign for the alabama senate has taken another hit. the washingtonian is reporting that communications director john rogers has left judge moore's team admit ongoing social harassment accusations. the special election between roy moore and doug jones is set for december 12. french president emmanuel macron has denounced the auctioning of migrants in libya as a "crime against humanity." recently seen video footage seen on cnn showed migrants being bid on and sold. macron said he hopes the debate would produce concrete action and revolution. the trump name coming off another new york city building. soho hotelf trump's plot out the licensing agreement with the trump organization and will drop the president's name. the building was reportedly having trouble selling condo units.several apartment buildings removed the trump name following the election. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. julia: "what'd you miss?" the odds of parting the senate republican tax bill last week are improving. alaskan senator lisa murkowski has agreed to kill obamacare's individual mandate. she has not yet endorsed the tax bill itself, were previously said she preferred not to mix it with health care. good to have you with us. her concerns were lessened by some degree to the potential opportunity for alaskan oil drilling opportunities in the future. are they enough to get her over the line with the senate tax bill? >> yes, i think it is quite likely that she now boats for the overall bill. this was the big hurdle. this is something she voted against months ago back when john mccain tanked the obamacare repeal efforts on the senate floor after midnight in a dramatic showdown. the fact that she is now willing to be on board with a version of a skinny repeal means i think the other issues that come up next week kind of pale in comparison, and there is that big sweetener which is sweet crude alaskan oil from the arctic national wildlife refuge essentially means a lot of revenue for her state and a lot of jobs for the oil industry. that is really king in alaska. joe: including the repeal of the individual mandate health bill and a number of ways it can help them with the score and say we are doing something on obamacare and maybe fulfill part of the problem. does it create any headaches whether it is in the conference, whether it is losing more senators? we already know about susan collins reservations about mixing the two. what are the pluses and minuses here? >> there are some big important pluses for the content of the bill. one of the keys is it makes under senate budget rules you cannot have deficits in future decades. saving the scores as a lo a lot o saving money in the long run, that means there is more room to have more tax cuts and make those corporate tax cuts permanent, which is a big priority of the trump administration. without that provision, they probably have to make a lot of it and maybe even all of it temporary. they don't want a temporary bill. does have a hangover effect next year. if this becomes a law, that makes it much harder to actually replace the affordable care act. there will not be as much money left over for some kind of alternative block grant proposal where states could set up their own system so i think there could be a problem with this down the line, but as far as getting it done through the house, the house has already passed individual mandate repeal. they have votes to spare on taxes. so it does seem as long as the overall tax bill can pass, this will be part of it. it is still unclear whether they will get to 50 because there are a lot of senators with other concerns on the bill. scores,aid the way it we have not gotten an official score yet. because of that qamar their senators holding up and not committing to any votes because they do not know if it will be too costly. i am thinking bob corker, for instance. >> there are several republican senators that want to see the score and they also want to see some of the more outside analysis to see how much it will add to the deficit. several senators do not want to add any to the deficit. so far, there have not been and analyses showing it would not add anything to the deficit, so that is something to watch. keep in mind a lot of other senators want to add more goodies to the bill. people like susan collins and a lot of other senators have particular provisions they want to add. she wants to add a refundable child care credit, for example, and take it out by raising taxes back up to the current level for people making over $1 million a year. she wants a smaller estate tax cut. these are the kind of fights that can play out on a very long voterama. julia: i want to pull all of these threads together now and ask you about the prioritization going forward. let's assume we managed to get the senate bill. at some point, they have to come together and come up with a combination of the two to pass this through. we also have to avoid a shutdown before the new year as well. at what point do they abandon this temporarily and go, we need to focus on just staying open for the new year and then come back to tax reform in the new year? >> i think they do not want to they want to put the belt of the metal and get this done and do whatever it takes to get this done quickly. they don't want to have any risk that roy moore either loses his race or wins in an unpredictable vote. they don't want to have that hanging out there. they want to get this done and quickly. one possibility to watch for next week is if they start talking to their house counterparts and try to preconference a bill and have that senate bill, the final bill that gets done in the senate, something the house can live with, especially if this roy moore situation go south for the republicans. julia: that makes total sense. scarlet: something they can live with seems to be the critical phrase here. coming up, as the retail sector crosses its fingers for a successful block party weekend, one company has every reason to be confident, amazon. we have the three charts you cannot miss, next. from new york, this is bloomberg. ♪ scarlet: time now for our weekly segment with abigail doolittle will be look at great charts and bloomberg functions. abigail: thank you so much. dan, who hasis more than 17 years of street experience. thanks for taking the time. let's talk retail. our on the brink. how do you advise your clients to invest on what is ahead? dan: one of the most interesting trade in the industry right now and has been is amazon long and short anything that is brick-and-mortar retail. abigail: fairly crowded? dan: fairly crowded based on the information i have and the indicators i look at. while i think the long leg of the trade continues to make thee, staying long amazon, short side of the trade of the short retail is kind of getting long in the tooth and i think you can make a case for buying retail the other srt if we look at some charts. abigail:, first why don't you show us that your clients -- first why don't you show us why your clients should stay on amazon? dan: recently gapped higher and took out resistance. over the course of the past two years, the 200 day moving average, upward sloping has been very solid support, and also importantly for me when i am looking at individual names is i like to look at the relative performance. amazon is a large-cap stock. relative to the s&p 500 and the lower panel, we can see that with the gap move higher in price, the relative performance also gaps higher and is continue to outperform the broader markets. we like to belong stocks that are outperforming the market. at this time of the year, late november into december, i think amazon is a good candidate for year end windowdressing, and you can see this continue to run into the end of the year. abigail:'s taking of the year, shares are up more than 50% this year, a stunning move. i see the pitiful uptrend but also this area of congestion over here. the higher highs and equidistant lows to justin volatility. mean risk.mes see dan: my view is up, up, and away. you can call in a breakaway gap. the fact that we remain above the moving averages and also the relative performance, anybody who is underweight or not involved with amazon is benchmark to the s&p 500 now has to play catch-up to the end of the year, and i can see fresh money flowing into the stock. abigail: ok so stay long in amazon to get long amazon. the exarch you, let's take a xrt,at this chart -- the let's take a look at this chart. dan: etf looking at the retail space. since 2014, a steady downtrend. 38-440, 3850 has been support. we tested the support level. now inflected higher trading above the average an interesting to me is that we have a positive divergence between price and momentum. we have a momentum indicator. put in a series of higher lows while price is bottoming. that is an indication that downside momentum is waning. anybody who is short this product is a proxy for being short retail. and potentially go along here. abigail: if below that level of support, that would be a warning signal, but think above that. dan: below that level supports i am wrong and probably makes sense to put the short back out. abigail: we have had fullback for the high yield credit. high yields etf having its with quarter since december 2015. is this a tell on stock? dan: i do not think it is a tell. over the past five years, the correlation between the s&p 500 and the jfk is -55%. so they actually moved longer-term trends in opposite directions, certain isolation, weakness and high-yield to meet is not a reason to give bearish on the market. abigail: so you are blessed from a macro standpoint. dan: i like themdan:. abigail: myself. happy days -- great stuff. happy thanksgiving. back to you. scarlet: thank you so much. macy's is gearing up for the thanksgiving day parade in new york city. , readyre live pictures to take off tomorrow. they are being held in netting, and everyone will go on the parade tomorrow. hopefully not too cool. you have never been? of course not. mean either. this is bloomberg. ♪ >> let's get to first word news this afternoon. congressional leaders from both sides of the aisle will meet with president trump next tuesday in an effort to head off a looming government shutdown. 8,rent funding ends december and with congress focused on the tax bill, little work has been done on issues surrounding funding. observers extent a short-term extension to keep the doors open. the white house is disputing the claim from a democratic senator that gary cohn faked that reception to get off the phone with the president. delaware senator tom carper says he was in a meeting with gary cohn when it happened. however, the white house says the story is completely false. airlines including american and fromd have settled claims the 9/11 attacks on the world trade center. insurers will pay $95 million to larry silverstein, the developer of the site. silverstein has already collected more than $5 billion from numerous lawsuits against other defendants. and as we sit down for thanksgiving dinner tomorrow, americans seem split on whether to serve up a side dish of politics. a new poll by the associated dread inds that 39% the volatile politics coming up while 35% are eager for the conversation. 23% don't feel strongly either way. they just want to eat turkey. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm nabila ahmed. this is bloomberg. scarlet: we all just want to eat turkey. let's get a recap of today's market action. you the us stocks falling for the most part and the nasdaq said record high here, but the dow is up isaac points. the -- off by 65 points. this after the latest fomc minutes a little more dovish. joe: at the margins. not a huge change. scarlet: just a hair. julia: "what'd you miss?" our next guest argues that markets -- despite new questions surfacing on recent performance some of what are they enough to derail global growth? let's bring in our guest. on the show. you as you point out and we just said, you say markets remain resilient, but i think there are a host of things that give me cause for concern, what is u.s. policy, tax reform, germany unable to find a government, nafta talks, china. why does no one care? >> i think the markets have overlooked or look to be on the factors for a variety of reasons, but it comes down to resilience of growth in a noninflationary way. in that environment what we are also seeing is a story every high levels of profitability. the united states almost really now at post second world war high. same can be said of multi-decade highs of profitability in japan. that is beginning to happen in europe and emerging markets you have strong growth, low inflation, central banks will move gradually, not abruptly. these other concerns can be set aside at least until they become really significant. joe: getting to the heart of the matter, is there anything on the horizon that you say, maybe the strong growth, low inflation environment will take a turn? >> i think there are two potential risks in terms of that framework over the next three to six months. the first is china having introduced more restraint on credit creation particularly through wealth management products goes through one of its periodic slowdowns, which would be a surprise to the market. it is not anticipated, and we have been through a period a pretty robust property sales in china but also the commodities story that is linked to it so that would be number one. the second would be despite little evidence of happening that we in fact do get a surge in inflation. wage inflation or price inflation or both, and it could come from the u.s.. it could come from western europe, japan, all areas where labor product markets are now poised what we previously would have seen those of elements, and it is something unanticipated in the markets. from that perspective, it would be the second consideration. scarlet: those two do not seem to work together. >> inflation alway larry: inflation always lags a cycle. ins adjusting we need to have both to happen to unsettle the calm in the market. i would suggest that either of them would be sufficient to dynamics,rent market but if they both happen at the same time, it is almost a perfect storm for markets. julia: going into a situation the last few years where bonds have made you money come equities have making money, so you're talking about the rise of passive investing and the fact that there is a failure in that sense, even if you have 60-40 bonds equities or vice versa, you benefited generally. the problem is the diversification can work for you as the change in the markets. larry: there has been a false sense of security. people will say i have a balanced portfolio weighted equally between stocks and bonds, and they could have held their portfolio like that using passive indices for any time since the financial crisis, the last eight years or so, and it would have performed well. not only strong performance, but also lulled into the sense of security. as of about 18 months or so ago, there were some cracked in that story as bond yields have fallen and generally was in. -- and risen. we have not had that shakeout phenomenon. whether we have the two episodes we discussed before, inflation or china slowdown, or we have real political shock that causes turmoil, people will find out that the 60-40 portfolio is not going to generate the kind of stability of returns that people hope for because in fact it is going to have a very different dynamic. joe: in the event of inflation surprise, it is highly possible that to assess the have rallied together for a long time can selloff, even though people have the metal framework that balancing off. larry: that is exactly right. that is for portfolio management the single biggest challenge. thatimes people argue equities are an inflation hedge and a genuine inflation surprise that is not true. particularly accurate evaluations, and would be vulnerability to the downside, see you have that exact outcome. my portfolio is no longer robust, and that is why we think as we look ahead to 2018 that there will be a lot more focused that will be required on properlyrates a really diversified portfolio, and it is not a simple 60-40 mix. scarlet: let's talk about politics and policy and bring that into the conversation because the republican tax plan is something they are working on and they want to get it done by the end of this year if not next year. you say that if there is a failure to pass the tax cuts, it would be not a significant. larry: the market is toying with the probability as to whether washington can as actually pass the legislation. you cannot really craft a tax reduction package without asking some people or some constituents to pay for it, so there's some doubt as to whether we will actually see legislation, but even if we do, the macroeconomic impact will be small medium and long-term. there will be some winners and the stock prices will probably react, but i suspect it will be second order. julia: will it add to growth? larry: i think it is debatable. in the current forms we have seen, there are some elements to it possibly adding growth. lowering taxes in general will probably increase economic efficiency in some quarters, but the scope of these tax cuts is relatively small. even a large cut in the statutory rate of corporate income tax, that is the big these of this going from 25% to 30% is not really that big of a deal since the effective corporate tax rate is actually not far above what percent so it impacts are likely to be smaller than often advertised. julia: i am just trying to add up how many guests we have asked whether they will be a negative impact. everyone thinks, no, maybe it will detract from growth or do very little. is that shocking? am i missing the point here? larry: partly i suppose it is in the way the question is interpreted. there are short-term impact on growth in the medium and longer-term ones. in the short-term sense, what you would like if you are really interested in spurring growth in the first several quarters after the tax cut is to redistribute those tax savings to entities economy that have a high propensity to disband. these tax cuts are geared toward individuals, the higher net worth individuals, and corporations that tend to have lower propensity to spend so the short-term impacts will be small, and anyone relying on some metric when you look at the medium to long-term that will improve economic efficiency. i think there is actually quite a bit of debate among economists as to whether the nature of these cuts, particularly in the statutory and corporate tax rate, really actually spur much in the way of innovation and efficiency. i would say the effects are probably positive but small. julia: i was going to ask you for short-term impact enough to win the 2020 election for the president. joe: which is what it is all about. [laughter] julia: more importantly. scarlet: they do so much. coming up, can brick and mortar retail prove its worth this holiday shopping weekend, or will it just be more doom, gloom, and debt? that is clever. this is bloomberg. ♪ >scarlet: "what'd you miss?" it is a make or break weekend for retail. does this holiday season bear resemblances to previous ones? let's bring in my focalin, cheap retail analyst for the mtd group. we will try to enter the second question first, which is you talk about how holiday 2017 will be closer to 2015 in 2016. >> last year was an election year. there was a lot of distraction going on. we had a lot of different sectors in the market that went into spending hibernation. 50% of the country was happy. the election went the way it was th. the other 50% was not. the for this year, w question going into retail is, what hope is there for the physical retailers competing against amazon? when you look at the landscape, where are the good signs? marshal: it is very interesting to watch as retailers look to compete against amazon, with them, or ignore it as a whole, which is what most retailers were doing it in years past.now they are trying to partner in . you have certain retailers saying we will sell our products to amazon as a platform. you have some brands and retailers saying we will partner up and actually build product for amazon. they are learning how to navigate this. is changing the dynamic. is really whenge you recognize it, they are looking at it and saying there are opportunities to compete against amazon.we can undersell them in price and out service them . what i did chancesyin whoever's trying to compete against amazon has a chance of winning? marshal: some of like walmart or walmart.com, they have lower prices than some of the retail outlets so you really have to do your homework. that is the key. there is not one particular retailer today that is always the lowest price, and the consumer knows that. they are looking to be able to take advantage of the best deals at the right time. julia: i feel like it is a race to the bottom, though, in terms of pricing. china trying to undercut amazon. they cut prices becaus. as that happens, they are gaining a greater share of e-commerce. an acceleration going on here. marshal: there are few retailers who have figured this out and are actually saying what we will do is develop our own brand of product. look at some a like target saying we are not looking to be the lowest price. we want the best product at the best value and working hard at developing private branded products that provide a new experience.if you don't carry the same product, you cannot compete on price. julia: does it change consumer expectations about this? into my said that there will always be another sale, another price cut. why should i buy for price? scarlet: there is no urgency. julia: yes. marshal: we have taken the sense of urgency not only out of holiday but all of retail. why? sales start not even as early as november 1. amazon owned 50% of the online sales when they put in prime day for christmas in july. where is the sense of urgency? you now have the ability to go in on black friday or any of these holiday weekends and by unlimited quantities rather than limited quantities. scarlet: how do you change the mindset? marshal: you basically have to have a sense of urgency, limited supplies of product, exclusive collections, and you have to make it where if you do not buy it now, you'll be penalized later. julia: tough to be the person, full price or nothing. joe: on friday, black friday, they will be a lot of footage of malls and doorbusters and all of that stuff. some people will say this does not mean what it used to and it is not representative. is their signal in the noise? when we are gathering data and anecdotes and stuff like that, is there some smart consumer of black friday news getting to find information from what we see? marshal: what you ask why is 2015 and 2016 different than 2017, the answer is in the timing factor. when you look at what is going on, we are seeing black friday as sales start earlier and earlier and last longer and longer. what happens? you cannot judge the success of black friday by black friday alone. really blackis november because the sales have been going on the entire time. also, when you look at a 10 year trendline of how holidays performed, retailers with all of their efforts opening on things giving day, moving cyber monday to before thanksgiving, all of these different things that brick-and-mortar and online have tried to do, they have not moved the needle, have not gotten consumers to spend early. they have gotten the procrastinator to shop earlier. julia: bring back the urgency. that is the headline. thank you so much. happy thanksgiving. coming up, we will hear from the bond etf king about the fears surrounding junk-bond etf. from ne new york, this is bloomberg. ♪ scarlet: "what'd you miss?" jitters in the junk-bond market this month have caused a brief upload of money in junk-bond etf. hyg posted the biggest inflow in nearly seven weeks. i spoke to the firms had matthew tucker and began by asking him how etf's have changed the fixed income world. bond you think about what etf's have done, they have helped improve liquidity for i think theys, and a thin are changing -- people have traded bonds has changed in the past decade since the financial crisis. a lot investors are looking for different ways to trade whether that is electronically or peer-to-peer networks. become part of this way to trade fixed income in a way that you could not do it a decade ago, so we are helping to give investors access to liquidity in the bond market. scarlet: there is the key word, access. you the focus this year is credit etf. where are they within the acceptance? matthew: you know, i think it is still early days in some ways. if you look at the entire fixed income etf market in the u.s., we are running over 500 billion. that sounds really big, but we have a $50 trillion fixed income market in the u.s. so it is still just about 1%. i feel like there is a lot of room for adoption and growth. karen etf's have been very popular.we are seeing a lot of you said from a lot of investors. it is a huge growth area still going forward. scarlet: yes, but there is a lot of room for growth as this chart shows. you told me it is not passive versus active so much as you see active managers using passive ats in their portfolios. give us some specific examples. matthew: sure thing. one of the things misunderstood about this whole debate, people say it is passive or active, and in the reality, it is an and statement for any investor. you look at institutional professionally managed fixed income portfolios, what you will find is the us etf's for things like investing cash so if i am running an active mutual fund and i get cash in the door, i using etf to put the cash to work and earn some yield. i might use etf's to manage risk so i am getting a bunch of money in and i don't want to be in the market or i can shift my duration, i can do that or i can do an asset allocation move. i want to move into em debt. i can buy and etf to get that exposure, so there is a tremendous number of uses that the etf can be used inside an active portfolio to help the manager do their job better at the end of the day. scarlet: i mentioned hyg earlier. you were there when barclays launched in 2007 and through the 2007-thousand eight crisis. -- 2008 prices. crisis. could we see another 8% discount on premium? matthew: i don't think we will see that for a high-yield etf like hyg. what is important is to remember when you are looking at those numbers or comparing with hyg which is creating -- trading throughout the day, it trades more than $1 billion of volume every day on the exchange. you compare that to a bunch of securities in the portfolio which some of them have not even traded in days, sometimes weeks, so the high-yield market is a soferent market to value, trying to say what a bond or portfolio bond is worth at a given point in time is pretty tough to do because you don't have this in kind of transparency you have say in the stock exchange. etf is telling you where the market is so a lot of times the ats at a premium, that is because underlying bonds have not yet been marked up. the price is not yet reflecting. scarlet: that was matthew tucker speaking on bloomberg's etf iq today, and a reminder you can catch the program each wednesday at 12:30 p.m. new york time, 5:30 p.m. in london. julia: great show today. tomorrow is thanksgiving in the united states. searches on google, how you eat your turkey depends on where you live in the country. here are the three main turkey recipes that were searched. smoked turkey, roast a turkey, that makes sense to me, fried turkey. guys, explained. smoking a turkey. joe: i will do smoked and fried this year. two turkeys. i bought this huge thing we will fill up with oil and heat it up with a propane unit. i also have a smoker, so i will try to barbecue a turkey. scarlet: you do not fit in your profile because in new york, we smoked turkeys. joe: exactly. i am a bad new yorker. julia: i understand and hot for the thingson of oil. scarlet: cannot stand outside to fry a turkey. in the south or california -- joe: anyone who is considering frying a turkey really needs to look at youtube safety videos. it is extremely dangerous. if you put too much oil in a thing, so be careful. scarlet: how than safety. joe: be careful. -- scarlet: health and safety. joe: be careful. scarlet: macy's is giving up for the things given day parade in new york city. you're looking at the balloons ready to take off.did you know about it ? i just learned about it. she will be there. julia: i will camp overnight. [laughter] scarlet: from new york, this is bloomberg. julia: happy turkey day. ♪ scarlet: coming up, do not miss the ecb minutes tomorrow 7:30 a.m. eastern time. joe: at 10 of mexico will be releasing. julia: you will be watching because you canceled thanksgiving. thanksgiving tomorrow and then black friday of course. scarlet: that is all for "what'd you miss?" . >> i'm alisa parenti in washington. you are watching bloomberg technology. congressional members from both sides of the aisle will meet with president trump to head off the looming government shutdown. funding and december 8 and with congress so focused on the tax bill, little work has been done on issues surrounding funding. three military personnel that traveled with president trump to asia have reportedly been reassigned from their jobs. the washington post says they had improper contact with foreign women during the vietnam leg of the trip. it work for the white house communications a dingy -- agency . the white house is disputing a claim from a democratic senator that trump economic advisor gary cohn fake to bad reception to get off the phone with the president. tom carper says he was in a meeting with cohn when it happened. the white house says the story is completely false. in former bosnian serb general convimelodic was